If you have kids at home you've probably heard about Club Penguin, a massively multi-player online role-playing game that was acquired by Disney in 2007 for $350 million.

Lane Merrifield, co-founder of Club Penguin and now a Disney exec, said the site, which launched in 2005, was "engineered without expecting big success." Merrifield said he was hoping for about 1,000 users. In the first few months of Club Penguin's existence, the site jumped from 5,000 to 25,000 users. By then it was clear that Merrifield's aim to simply "break even someday" wasn't ambitious enough.

Now Club Penguin has 150 million registered users around the world.

That infrastructure, which enables children to jump around to different servers to build igloos, decorate them and collect virtual coins, largely remains intact. Club Penguin remains a Flash-based site and even calls its various locales servers.

Underneath the hood, Club Penguin is undergoing a dramatic change. "We're rebuilding the entire world on a different technical infrastructure," said Merrifield. On Thursday, Club Penguin started to roll out new chat and friends tools that will be available to all users in the weeks to come.

Club Penguin's new chat system is built on six years of player behavior and includes a database of 300,000 approved phrases in four languages. This patented chat system supports 56 million messages a day.

This infrastructure has to support:

10,000 emails a day from kids.

200 people worldwide that answer those emails personally in four different languages.

A cutting edge kid-safe messaging system complete with filters and translation capability.

25 million Puffles.

950,000 blog posts.

Subscriptions.

Chat logs.

And a new translation service so kids can talk to each other around the globe in their native tongue.

I caught up with Merrifield to talk shop in an interview that had my two daughters (penguins, right) stoked about what I do for the first time since---well ever.

Here's the recap:

The strategy: Club Penguin is a subscription service that has been profitable since its early days. Merrifield's aim is simple, but difficult to pull off: Provide social networking experiences for children, who engage in different ways than adults do on Facebook. On Club Penguin, play is front and center. "Kids don't socialize the way adults do on Facebook," said Merrifield. "They want to play. It's like when you give your kids a gift and the cardboard box becomes the main attraction. The goal here is to give the kids the best cardboard box, best markers and scissors so they can play games and role play." These kids bug their parents for subscriptions and they ultimately cave. Trust me, the model works well.

Customer support: Merrifield has a network of 200 workers trained to moderate chats and ensure safety for the young users. These workers are housed in seven offices around the world. Club Penguin has four languages covered---English, Spanish, Portuguese and French---with a fifth on deck. These moderators are also trained to play Club Penguin's iconic characters---Captain Rockhopper, Aunt Arctic, Sensei and Gary the Gadget Guy. Merrifield said each of the game's key characters have humans behind them---much like Mickey and Minnie Mouse at Disney World. The characters roam and kids flock to them. "We could do AI (artificial intelligence), but real humans give a better experience," said Merrifield. "It can't be AI when a kid asks 'are you real?'"

Lane Merrifield. Credit: Disney

Business intelligence: Club Penguin has a home-grown dashboard in its customer support tools to monitor trends, emerging expressions and collect data. "Different trends pop. We use BI from a data perspective as well as anecdotally," said Merrifield. "By watching play you get both quantitative and qualitative data. It always baffles us how kids can create." The information, which is only used internally, spots trends in igloo design---things like Sept. 11, 2001 memorials and references to Japan's earthquake earlier this year. This intelligence is used to create the Club Penguin Times, which has a bigger circulation than the New York Times, and improve filtering.

Safety and security: For Club Penguin to exist, safety is everything. Regulations on targeting children and the filtering necessary means that many companies have avoided targeting an audience under 13. "We modify filters 100 times a week," said Merrifield. Why? That's how fast pop culture can change. Club Penguin's filtering system is based on white lists---phrases that are approved. The trick for Club Penguin is discovering new references. For instance, the word lollipop can be fine one day and then be deemed inappropriate when used in a rap song. Context is critical. "Our filtering system has a heavy dose of tech, but we've never found a technology that can replace human moderators," said Merrifield. "There are just too many nuances." Like most of its systems, Club Penguin's filtering system is proprietary. The Disney unit has nine filed patents on the system and keeps five years of chat logs. "It's the most advanced online communication tool for kids," said Merrifield.

Communications enhancements: The new version of Club Penguin's chat system will enable predictive text and typing. That should allow children under nine to communicate better. "Users 4, 5 and 6 don't chat with each other," said Merrifield. "Version two will get used to the player and allow them to click through a sentence and say more than before at the speed of reading not typing." The real innovation is that once a phrase is added to the supported phrase list it can be used multiple languages because it is given a numerical value. The future will include a system that acts as a translator where a user speaking English can converse with a pal in French without every knowing the difference. "They will be on the same servers, but speaking in their native language," said Merrifield. "Kids can grow up with no language barrier." To accomplish this feat, Merrifield said Club Penguin separated chat from the game itself.

The server setup: Merrifield couldn't go into much detail on his infrastructure, but Club Penguin operations on data centers around the world and deploys a cloud computing set-up. "We didn't call it cloud when we started, but it was the only way to do it," he said.

The use of Flash: When Merrifield started Club Penguin, the site used Flash 6. "Back then Flash 6 was a banner ad technology, but it was the only thing that could do what we needed," he said. Adobe has propelled it forward. Club Penguin will continue to use Flash because HTML 5 is still young and needs more additions to support Club Penguin. Nevertheless, Club Penguin will be moving more toward HTML 5 while continuing to use Flash.

Expansion: Merrifield said being part of Disney typically means properties and characters go trans-media. Club Penguin so far has avoided massive commercial expansion, but there are experiments underway. Club Penguin is starting to get plugs on the Disney Channel and there are short cartoons. It's also likely Puffles and Club Penguin characters also are starting to appear in real world environments. I won't be shocked at all to see a Club Penguin presence at Disney World in a few years.

Social networking for kids: Today, Club Penguin requires kids to hop to various servers to explore. That process will become easier. Merrifield said the server terminology may be toned down a bit (even though I think it's comical to hear my 4 year old talk servers). Merrifield said that a new friend list will make it easier to find characters and catch up with playmates for a little card jitsu. The audience is also getting a bit older---13, 14 and 15 year olds will serve as guides for younger siblings and wind up playing again. In the latest social enhancements, Club Penguin will allow for fully customized penguin avatars, best friend tagging, tools for finding friends and a feature to eliminate penguins from your computer screen.

On apps and being cutting edge: Club Penguin has stepped up its app push in the last six months and its Puffle Launch is an iTunes hit. Club Penguin has apps on iOS and is planning ones for Android. "We move when trends reach a certain size and penetration," said Merrifield. "We were a little late with iOS, but we're dealing with the kids space. HTML 5 may not work because they may not have the latest browser. Kids are not bleeding edge and often have a hand-me-down from a parent." How does Club Penguin know when to go app happy? The kids community starts talking about Apple products a lot. "We track trends and in the last six months we heard a lot of kids asking for iPod Touches and iPads for Christmas," said Merrifield. Whatever Club Penguin does the apps can't be buggy because the site has a lot of trust with its customers. One reason Android apps will follow iOS versions is the testing requirements. Club Penguin has to test its apps on multiple versions of Android and devices.

Design simplicity: One of Merrifield's biggest challenges is making Club Penguin simpler to play. Club Penguin tests technologies and designs at boys and girls clubs. "We put it in front of kids and just watch," said Merrifield. Club Penguin had to make its igloo designs easier to use. Igloos are customized by kids---it's a virtual equivalent of the cardboard box that winds up getting a lot of love.

Thank You

By registering you become a member of the CBS Interactive family of sites and you have read and agree to the Terms of Use, Privacy Policy and Video Services Policy. You agree to receive updates, alerts and promotions from CBS and that CBS may share information about you with our marketing partners so that they may contact you by email or otherwise about their products or services.
You will also receive a complimentary subscription to the ZDNet's Tech Update Today and ZDNet Announcement newsletters. You may unsubscribe from these newsletters at any time.